By Kim Yoo-chul
Staff Reporter
Despite no pickup in demand for consumer electronics products, Samsung Electronics said Monday it will press ahead with its research and development effort.
The company, the world's biggest producer of dynamic random access memory (DRAM) chips, is to spend some $2 billion on chips R&D this year to maintain its technological leadership.
"For the sustainable growth in our memory chip business, Samsung plans to invest some 10 percent for R&D out of this year's estimated total chip sales," said Kwon Oh-hyun, chief of Samsung's memory business.
Last year, Samsung spent some $1.6 billion on R&D in chips ― 11 percent of total sales. Since 2006, the Suwon, Gyeonggi Province-based technology giant has been investing over 10 percent of the sales on R&D, according to officials.
"Samsung will widen the technology gap with rivals by developing more-advanced DRAM and NAND flash memory chips, with the application of 40-nanometer and 30-nanometer processing level technologies, respectively," he said.
Kwon was speaking on the sidelines of a "Samsung Global Investors Conference" held in the Shilla Hotel.
Regarding the outlook for the global memory chip market in 2009, Kwon was cautious.
"It will be very tough year for Samsung's memory chip business. The demand for computers and mobile phones has stagnated due to spending cuts by our consumers," he said.
He added that uncertainties still remain about the timing of a possible turnaround in the memory chip market.
"But some 'bottoming-out' signs have emerged," Kwon said.
But he declined to comment in detail about this year's investment, sales and profit target, saying that his company will deal flexibly with any given situation.
At the forum, Samsung said it expects shipments of DRAM chips to just grow by 10 to 15 percent this year and that of NAND flash chips to rise by 25 to 30 percent. The targets are down from last year.
DRAM chips are commonly used in personal computers, while NAND flash chips go into high-end handheld devices such as music players and digital cameras.
The remarks are in line with the company's bleak situation.
Samsung's bottom line took a pounding as the benchmark prices of DRAM and NAND flash chips plunged in response to low demand and massive inventories.
But hopes have grown that its semiconductor business will turn around from the second quarter as prices for chips show signs of recovery thanks to industry-wide output cuts and ongoing inventory clearance.
In the first quarter, Samsung's market share in DRAM chips rose 34.3 percent from the previous quarter's 30 percent, according to iSuppli, a market research firm.
The company's rival Hynix Semiconductor added 0.8 percentage points to reach a 21.6-percent global share in the first three months of this year.